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Your Step-by-step Guide to Choose the Right HR Software

The HR software with desired features can significantly impact an organization’s ability to recruit and retain top talent. However, it is crucial to learn how to choose HR software properly for entrepreneurs. A recent PwC survey found that 36% of HR leaders plan to switch vendors when their current subscription ends. It is mainly due to a wrong selection.

In this post, we will discuss the useful ways to choose the right HR software. Let’s start from scratch and understand the role of HR software in modern companies.

What is HR Software?

HR software is a comprehensive suite of programs, platforms, and systems that human resources departments use to manage processes and improve operations. It is useful in managing all HR functions ranging from people management to compliance and reporting to analytics.

Importance of HR Software

HR software automates processes, organizes data, and provides actionable insights while enhancing the employee experience. However, choosing the right HR software to manage everyday tasks is necessary while making an organization a better place to work.

The right HR software can support strategies, operations, and processes related to human resources. Choosing a holistic, integrated HR platform can assist your company in managing learning and development, rewards and recognition, employee engagement, etc. Here are the key types of HR software.

Types of HR Software

Thanks to evolving technology, we have advanced HR software available to meet complex business and resource needs. We can categorize HR software solutions into three broad types, HRIS, HCM, and HRMS.

HRIS (Human Resource Information System)

This is the most basic type of HR software and is designed to manage people and processes. It typically includes primary features such as employee data management, time and attendance tracking, payroll processing, and benefits administration.

HCM (Human Capital Management)

This is a more comprehensive type of HR software that includes all the features of HRIS with additional features such as talent management, performance management, and succession planning.

HRMS (Human Resource Management System)

This is the most holistic type of HR software and includes all the features of HRIS and HCM with additional features such as payroll and time and labor management. We can consider this type as an umbrella software.

We can also classify HR software on the basis of whether it is delivered on-premise or as a cloud-based solution (SaaS). All these types of HRMS software can address various business challenges effectively.

Challenges HR Software Can Solve

HR software can solve a wide range of challenges for companies of all sizes. Some of the most common challenges that HR software can help with include:

Time-consuming Processes

HR software can automate many of the manual, time-consuming, and repetitive tasks such as payroll processing, benefits administration, and performance management.

Regulatory Compliance

HRMS can help companies stay up-to-date on changing regulations and ensure that they are in compliance. This can help companies avoid costly fines and penalties.

Employee Communication

HR software can provide a central platform for communication and collaboration between HR professionals, employees, and managers. This can help companies improve the flow of information and keep everyone on the same page.

Data Access

HR solutions can collect and store a wide range of data about employees. This data is useful in generating reports and insights that can help companies make better decisions.

In addition to these general challenges, you can select the right HR software to address specific challenges faced by companies in different industries. For example, HR software can assist the healthcare industry to track and maintain compliance with HIPAA regulations.

How to Choose the Right HR Software

HR software can manage and automate various processes related to talent management, performance management, succession planning, employee engagement, and regulatory compliance. However, it is essential for companies to focus on HR software selection. Investment in the right HR is beneficial and a wrong selection can be a liability for your company.

Here are five useful steps for choosing the right HR software so that you can improve an employee’s productivity and performance.

Requirement Identification

Before initiating your hunt for the right HR software, it is important to take the time to understand your organization’s specific needs. This includes identifying the areas where you want to take the help of HR software, the common pitfalls and challenges for your HR department, and the major obstacles you face in cultivating a positive work culture.

You can also consider which HR processes are the most time-consuming and could be automated with the right software. If you are already using HR software, you can find the scope where new software would fit.

Moreover, it is important to be aware of the most frequent HR admin-related employee complaints, company policies, regulatory requirements, and the tech-savviness of your team. Finally, you should consider a budget for your HR software purchase and maintenance while keeping the ROI in mind.

Vendor Searching

Once you have a clear understanding of your needs, you can start finding reputed HR software vendors. You can go through related websites, compare various HR software tools, and talk to other HR professionals about the same.

As you do your research, it is important to keep track of the tools that perform well across the board and define the factors that you can negotiate.

Some of the questions you should ask yourself when you select HR software vendors include-

  • Which are the best-rated vendors in HR software?
  • What is each tool’s top-rated feature?
  • What do customer reviews and testimonials have to say about different vendors?
  • What kind of support and other resources necessary for a seamless onboarding does the vendor offer?
  • Is robust documentation available?
  • Do the features of HR software meet your needs?

Some vendors also offer a free trial for their software. It is better to experience the tool before purchasing. You can also ask for after-sales service and maintenance.

Shortlist Vendors or Software

Once you have gathered information on a number of vendors, it is time to narrow your selection down by making a list of shortlisted vendors or software.

You can compare the top contenders head-to-head and see which one comes out on top. You can also read comparison blogs and review sites, look for case studies that demonstrate the tool’s ROI, and have your HR personnel weigh in on which HR tool they think is the best fit.

Finally, if you want to be really thorough, you can send each of your shortlisted vendors a request for proposal (RFP). An RFP includes key information about your company and its specific needs, your queries, and specific rules related to the software deployment.

Get Demo

Once you have narrowed your selection down to a shortlist of vendors, it is time to take advantage of the free demos that are available. This will give you a chance to play around with each HR software and get a sense of its UI, UX, and other capabilities.

You can ask for feedback from as many employees as possible. As the end users, their inputs matter in addressing possible shortcomings. If the software you are favoring does not offer a free trial, you can try it out on a monthly basis before committing to an annual billing cycle. This will give you a chance to make sure that the software is a good fit for your organization before you make a long-term commitment.

Implement and Onboard

Once you have selected an HR software solution, it is important to make sure that employees are comfortable with the software and feel confident using it. The main reason companies fail to see ROI on software purchases is failing to follow through on implementation and onboarding. It is beneficial to keep some budget aside for regular maintenance and support services.


HR software selection is a difficult task for any company. However, if you want to meet general and specific challenges related to the HR department effectively, you must choose the right HR software.

Hope these types and step-by-step information will help you select the right HR software for your company. You can always consult a reputed and reliable vendor to know more about the scope and benefits of customized HR software.